Report: SMB Spending to Exceed $600 Billion This Year

A new update to IDC’s Worldwide Semiannual Small and Medium Business Spending Guide forecasts total IT spending by small and medium-size businesses (SMBs) to be nearly $602 billion in 2018, an increase of 4.9% over 2017. With a compound annual growth rate (CAGR) of 4.7% for the 2016-2021 forecast period, spending by businesses with fewer than 1,000 employees on IT hardware, software, and services, including business services, is expected to reach $684 billion in 2021.

According to the report, hardware, software, and IT services will each account for around 30% of total SMB spending in 2018 with business services delivering the remainder. While hardware is currently the largest category of spending, IDC expects it to be overtaken by software in 2019 and IT services in 2021. Software will experience the fastest spending growth over the 2016-2021 forecast with a CAGR of 7.5%, followed by business services with a CAGR of 6.6%.

“SMBs around the world are increasingly interested in investing in resources to improve employee productivity and improve their competitive positions,” said Ray Boggs, vice president, SMB Research at IDC. “While SMBs, especially smaller ones, have immediate tactical needs to sharpen performance, they are also looking to coordinate resources in a meaningful way. For many this will be an important step in their digital transformation.”

Devices will be the largest category of technology spending in 2018 with SMBs allocating $115 billion to personal computing devices, peripherals, and mobile phones. Applications will be the second largest spending category at $99 billion, led by investments in enterprise resource management (ERM), content applications, and customer relationship management (CRM).

On a geographic basis, the United States will be the largest market with SMB IT spending expected to total $186 billion in 2018. China will be the second largest country with $56 billion in SMB IT spending forecast for this year, followed by Germany ($37 billion), the UK ($36 billion), and Japan ($35 billion).

IDC’s Worldwide Semiannual Small and Medium Business Spending Guide provides detail on small and midsize business IT spending across 40 technology categories in nine geographic regions and 53 countries.

Channel Impact^®
The data provides some clear directions on channel revenue opportunities in a market segment most heavily served through indirect sales.